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Strategic Actions for a Profitable Q1: eCommerce Insights for 2025

In this episode of 2X eCommerce, we delve into six key actions to take in Q1 to set the foundation for a successful 2025. The episode covers strategies for brand building, optimizing gross margins, improving cash flow, rethinking pricing strategies, building a strong team, and expanding into new channels like TikTok Shop. Also introduced is the Scale-Up Blueprint 2025 coaching program, exclusive to 12 eCommerce operators. Tune in for actionable steps to increase profitability and growth in the New Year.

  • (00:00) - Introduction and Episode Delay
  • (00:41) - Planning for 2025
  • (01:11) - Key Actions for Q1
  • (02:14) - Top of Funnel Reinvestment
  • (06:21) - Optimizing Gross Margins
  • (08:14) - Cashflow Management
  • (09:53) - Rethinking Pricing Strategy
  • (10:51) - Building the Right Team
  • (12:16) - Expanding into New Channels
  • (13:04) - Conclusion and Coaching Program

Creators & Guests

Host
Kunle Campbell
Host of the 2X eCommerce Podcast and Co-Founder at OCTILLION

What is 2X eCommerce Podcast?

Hosted by Kunle Campbell, who is an operator of a portfolio of consumer brands, 2X eCommerce is a weekly podcast for ecommerce operators by ecommerce operators. We interview remarkable ecommerce founders and leading enablers of ecommerce growth, with every episode promising to give you at least one growth hypothesis or idea you can test.

Our focus is growing your ecommerce revenues from a cross-functional perspective, be it marketing, your tech stack, operations, finance, or customer experience. We believe that by bringing together insights from a variety of experts, we can help you double the throughput of key ecommerce functions.

2X your eCommerce growth with insights from Kunle and handpicked experts.

Follow us on Twitter, LinkedIn and Instagram: @2XeCommerce

6 Essential Actions to Win Q1 and Crush 2025
===

[00:00:00]

Introduction and Episode Delay
---

Kunle Campbell: Hey, eCommerce operators. Welcome back to the 2X eCommerce. This episode should have dropped on Tuesday, the 17th of December, but was delayed because I wanted it to be a solo show. But I fell ill and couldn't record it on schedule. This is one of the last three episodes of the year. All of which will be solo shows where I would share. Actionable strategies and insights to help you. Navigate 2025. So I've got some exciting episodes planned for January. All centered around planning again and strategy. For the new year.

So definitely stay tuned.

Planning for 2025
---

Kunle Campbell: As we close the chapter in 2024. The question you should be asking yourself is what is the game plan for 2025. Starting on the right footing in Q1 is critical. As it sets you up for success. [00:01:00] The operators who win in 2025 are the ones who start strong, focus on scalable and profitable growth and take decisive actions early.

Key Actions for Q1
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Kunle Campbell: So today, We're diving into six key actions to take in quarter one that would set you up for your best year yet. Stick around because I'll be sharing details about my scale-up blueprint, 2025 edition, which is a coaching program. currently open to only 12 eCommerce operators. This episode focuses on quarter one. The critical starting point for the entire 2025 game plan. It's geared towards one primary objective. Increasing profitability. To a targeted level in 2025.

Why? Because profitability is what matters. But before we dive in. Make sure to subscribe or follow this [00:02:00] podcast wherever you listen on YouTube. Spotify apple just hit that follow button. So you don't miss an episode. Now. Let's jump right in.

Mhm.

Okay.

Top of Funnel Reinvestment
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Kunle Campbell: So quarter one is the perfect time to focus on brand building. And I call this top of funnel reinvestment. It's all about reach. Attention and relevance. You need to get your brand in front of as many people as possible. But also making sure they understand who you are. What you stand for and what you offer.

So here are some ways to build, reach. Think about high traffic channels, like PR. Above the line, advertising brand campaigns, YouTube high impact, social media influencer seeding and collaborations. Now I've named so many options here [00:03:00] and that's because there are so many top of funnel options available to you. You listening to this podcast?

I'm sure. I'm, I'm hoping I'm praying. Uh, not dependent on just paid ads at this point in time, you must have some top of funnel channel. That essentially.

Accelerates or enhances your paid ads. So I'm assuming you must have some sorts of leverage, some top of funnel leverage that you're using. And it really depends on where you are as a brand.

So if you're a PR driven brand, You would be looking at doing more PR. If you are more. Uh, both the line. And you have a brand strategist. You'd be looking at more brand campaigns. If you're into content, you look, we'd be looking at creating more content. The idea here is to double down, if not triple down or even 10 X, all that you're doing from [00:04:00] a high traffic channel perspective. That's from a top of funnel perspective.

You want to get people to learn about your brand, your mission and your products. Wherever you're getting the traffic from. But its a time to really double down on traffic, but here's the thing. It doesn't stop at building reach. You need to integrate performance into brand building efforts. What do I mean by that you're converting attention into traffic. Where should this traffic go? Let me give you an example.

Say you are really crushing it on Instagram. You have a fantastic Instagram profile or you're working with a range of influencers on Instagram, and they're driving a lot of traffic to your Instagram profile. Then you want to guide some of that into your Instagram DM. So you can collect zero party data like emails on [00:05:00] mobile.

Now, if you're on TikTok, you might want to work with creators who drive traffic to your TikTok shop. Now. Driving traffic to your website, in my opinion is ideal because you're getting your audience accustomed to your brand in your space. And you have that ability to collect zero party data, like emails, phone numbers through pop ups .

So with that, that's the highest form in my opinion. So if like you had a YouTube channel, you want to be driving traffic to your website and then, off the back of your website, you're collecting. Uh, what I call secondary conversions rather than primary conversion, which is sales. You're really optimizing into collecting. Uh, custumer data. Right, which is going to help you all through 2025.

So Q1 lays that foundation for driving traffic. It's cheaper than any other quarter to get traffic. [00:06:00] You know, even if you're doing deals with, with the press, with magazines, with content creators. They tend to sell. The traffic on attention, cheaper in quarter one and many brands, neglect dots. And with that neglect, Gives you that perfect opportunity and competitive edge.

Optimizing Gross Margins
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Kunle Campbell: The second thing I want to talk about for quarter one is really looking at your gross margins because gross margins are the backbone of profitability for the best in class eCommerce brands getting margins at 70% or above is.

Like great. But I can assure you. I've seen so many PNLs. I've operated businesses. Myself, not every business is even near that level. Many businesses are around 55. Maybe 60. But the key [00:07:00] in quarter one is to see how can I improve where I am? Let me break it down. Gross margin is a difference between your revenue and your cost of goods.

Right? Expressed as a percentage of revenue. So you have those two variables, revenue, cost of goods. At the start of the year, you can't really influence revenue, but you can influence your cost of goods. So imagine you're at 50%, shaving off an extra 5% in cost. can gets it's over two 55% gross margin. Which means you have 5% that you could use. Uh, to make a key hire. Buy more inventory or invest in your marketing now, how do you get that 5%?

You need to work with your finance team to identify opportunities, but the real, the key thing here is focusing on your cost of goods. This is where the most improvements will happen. Which is really down to [00:08:00] negotiating with your suppliers using last year's volume as a leverage. And if your suppliers are not budging, you probably want to find other suppliers and use those suppliers' quotes as further leverage.

Cashflow Management
---

Kunle Campbell: Now the third point I want to make or third action for you.

And quarter one is optimizing cashflow. Your cashflow is a lifeblood of any business and negative cash conversion cycle where you're selling inventory before you actually pay for it should be your ultimate goal. And to achieve this, even though it sounds impossible or near impossible. Is renegotiating supplier payment terms like your net on delivery. So the other. Thing I've done in the past is use supplier invoice financing solutions to buy more time. But what you have to keep in mind is [00:09:00] that it comes with a margin hit of up to 5% or even more. Because many of the supplier financing firms will charge you 1% or more up to 2% per month.

For every month, they covered that invoice. They had one or 2% to. The cost of goods, which means again, What. You're going to be. Reducing your. You're going to be increasing your cost of goods, but sometimes you need it. But you have to be very cautious because if you're over leveraged, some of these lines of credits can be withdrawn. So use forecasting tools to really balance inventory levels and avoid overstock.

And, stockouts cashflow. Gives you the flexibility to invest in growth. So please make it a priority.

Rethinking Pricing Strategy
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Kunle Campbell: The fourth action you need to do in Q1 is you need to rethink your pricing strategy. Believe it [00:10:00] or not inflation. Hasn't gone away. You're likely paying more for raw materials. Cost of goods and logistics. So it's time to rethink your pricing strategy to protect your margins. Here's the thing you don't always have to absorb this cost. Adjusting your prices to reflect inflation is a necessary step to retain your profitability.

So what else suggest is benchmark your pricing against competitors to ensure your price in this competitive, but also profitable experiment with bundling products or dynamic pricing to improve margins on slow moving SKUs and then margin retention. Is key. Don't let rising costs eat away into your profits. The fifth action I want you to do.

Building the Right Team
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Kunle Campbell: In quarter one is build the team you need for 2025. No, matter what your growth or [00:11:00] profitability targets are. You need the right people to help you get there. Building a strong team is essential.

Think about these questions. Do you have competent leaders in place? Are, your goals aligned with your team's capacity. I love the entrepreneurial. Operating system it's called the EOS framework, which is a great way to structure your team. It focuses on the visionary integrator dynamic and sharing everyone's roles are clear and aligned with your business goals. If you're new to the EOS, check out the book "TRACTION" for an excellent overview.

Let me share an example, the nutrition brand B P N scaled from $5.5 million in 2019 to $22 million in 2020 profitably. That's a. [00:12:00] 400% increase. And what founder Matt Chewing credits much of this growth too, was building the right team that plugged into much upgraded systems. Remember. People scale businesses, simple.

Expanding into New Channels
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Kunle Campbell: Now, the last point I want to make is expanding into new channels.

Now this is a bonus point. And may or may not apply to you. Expanding into new channels, like TikTok shop can accelerate your growth, but it's not for everyone. It depends on your current resources and situation. TikTok shop is a fast growing channel with enormous potential for certain brands, but it requires dedicated personnel. inventory Capital for testing and scaling. And if you're ready, TikTok shop could be a game changer. But if your core at full cost needs to be elsewhere. That's [00:13:00] okay too. Grow at your own pace.

Conclusion and Coaching Program
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Kunle Campbell: So just to wrap up. I've given you six focus actions to make you on your most productive quarter yet. These are practical. Actionable steps to set the foundation for a record breaking 2025. If you're ready to take this even further. My scale-up blueprint 2025 edition is now open.

If you're ready to take this further, my scale-up blueprint 2025 edition is now open to just 12 eCommerce operators. This exclusive coaching program is designed to help you refine your strategies, align your team and hit profitability targets in 2025. I've linked to the application form in the show notes of this episode, just [00:14:00] click it to apply. Let's make 2025 your best year yet. So thank you for tuning in, and if you found this episode valuable subscribe and share it with your network, remember the foundation you built in quarter one sets the tone for the entire year. Let's commit to taking bold strategic actions together. Until next time folks stay focused.

Take action and let's make 2025 extraordinary.